Telefónica Enters SD-WAN Fray With Nuage Deal

Spain's Telefónica is poised to launch an SD-WAN service in its domestic market later this year after striking a deal with Nokia's Nuage Networks business.

Under the deal announced today Nuage Networks will provide SD-WAN technology based on its Virtualized Network Services platform.

Telefónica said that its international division and other subsidiaries would introduce SD-WAN services following a launch in Spain in the second half of 2017.

The service, it is promised, will allow Telefónica's enterprise customers to order and customize WAN offerings through a self-service web portal.

The move follows the introduction of SD-WAN services by a number of other major telcos in the last year, and comes amid concern about the interoperability of vendor equipment and the likelihood of further consolidation in the overcrowded supplier market. (See Tata, Colt Take Vendors to Task on SD-WAN Interoperability.)

The possibility of consolidation appears to have fueled service provider anxiety about interoperability, with telcos worried that SD-WAN suppliers might disappear as a result of takeover activity and leave them stranded.

That concern could itself be the catalyst for a shakeout, prompting operators to strike deals with the very biggest players and avoid the SD-WAN startups.

Such a development would clearly suit the likes of Cisco and Nuage, which has also recently landed SD-WAN deals with UK-based Vodafone Group plc (NYSE: VOD) and China Mobile Ltd. (NYSE: CHL).

Even so, the IP networks and applications division to which Nuage belongs has had a difficult financial start to the year, recently reporting a 10% decline in sales for the first quarter, to about €1.3 billion ($1.4 billion), compared with the year-earlier period.

Interestingly, both Cisco and Viptela had been SD-WAN suppliers to US-based Verizon Communications Inc. (NYSE: VZ) before their takeover deal, suggesting that interoperability is not always a problem.

On the other hand, that particular deal means that Verizon is now using a single supplier on SD-WAN.

Trumpeting Verizon's "multivendor" approach during the MPLS, SDN and NFV World Congress in Paris in March, Peter Konings, the operator's director of products for the EMEA region, told conference attendees that Verizon was planning to add another vendor into the mix in the near future.

From a customer perspective, SD-WAN services have been touted as an alternative to old-fashioned MPLS technology for companies that want to slash expenses by running applications over lower-cost Internet connections.

According to a Heavy Reading survey carried out in late 2016, more than 80% of respondents rated SD-WAN technology as either critical or important for telcos looking to automate operations and reduce service costs. (See SD-WAN Boom Coming in Next 2 Years.)

About two thirds of respondents reckoned wide-scale rollouts would occur over the subsequent 24 months.

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